TechZone360

There Still is an iPad Market and Then the Rest

With Apple about to unveil its iPad 3, one always is prompted to take another look at how Apple is faring in several consumer electronics markets, and a rational person might continue to be astounded at how well Apple has done.

Apple iPad penetration in the United States will nearly double from 2011 to 2013, from just over 12 percent of Internet users to 22 percent. But other suppliers will whittle Apple's market share from 83 percent in 2011 to 68 percent at the end of 2014, eMarketer predicts. That would be a dominating performance by almost any measure.

There will be 54.8 million tablet users in the United States by the end of 2012, eMarketer predicts. By the end of 2014, that number will nearly double to 89.5 million. But what has worried consumer electronics manufacturers ever since the advent of the MP3 player is Apple's ability to completely dominate a category.

The adage that "there is no tablet market, only an iPad market" is no longer as true as it was a few years ago. But it still might be fair to say there is an iPad market, and then there is a tablet market. When one supplier has 70 percent market share, it is analogous to the MP3 player market, which wound up being an iPod market, with some other providers.

In 2011, for example, Apple continued to hold 78 percent of the music player market. That is what "terrifies" other competitors. Apple has more than once showed an ability to dominate a new consumer electronics category.

The mobile phone market is more complicated, as Apple does not compete in the feature phone category. In the smartphone category, Apple has about 30 percent share globally. And Apple continues to add to its share.

But Apple has managed to achieve an important distinction in the smartphone market. By itself, Apple earns 62 percent or so of all smart phone supplier operating profit, according to Strategy Analytics. Sooner or later, that makes a difference.

Apple, in the fourth quarter of 2011, shipped 37 million smart phones worldwide, up 117 percent from 17 million in the second quarter. This represented the strongest sequential quarterly growth among the top-five smart phone brands, according to IHS ISuppli.

The “nightmare” for all the other competitors is that Apple seems quite able to create new markets others have difficulty entering.